SembMar - OCBC ups target for Sembcorp Marine to $6.17

Stock Name: SembMar
Company Name: SEMBCORP MARINE LTD
Research House: OCBC

OCBC Investment Research has raised its target price for Sembcorp Marine (SCMN.SI), the world’s second largest oil rig builder, to $6.17 from $5.70 and kept its buy rating.



OCBC said it has increased its net profit forecast by 9.3% for Sembcorp Marine’s 2011 financial year after incorporating higher margin assumptions.

The brokerage said the prices of recent jack-up orders secured by Sembcorp Marine are on average 12% lower than those clinched in the peak years of 2007-2008, which is better than OCBC’s expectations.  

It added that if new orders continue to flow, the number of available rig slots at prominent yards will decrease and Sembcorp Marine may enjoy greater pricing power.

Based on recent analyst briefings of three U.S. drillers, OCBC also noted increasing optimism about the general outlook for the rig market in various parts of the world, though activities in the Gulf of Mexico are expected to remain low due to few new licenses for oil drilling.  

At 9:21 a.m., Sembcorp Marine shares were down 0.6% at $5.38 on a volume of 480,000 shares.